Dodd aiming for Cap on Credit Card Interest Rate/Merchant fees [View All]

http://www.baltimoresun.com/business/bal-dodd-credit0523,0,2063810.story



The most sweeping reforms of the credit card industry in two decades were signed into law Friday, curtailing charges and practices that industry critics have said are abusive, if not predatory.

But Sen. Christopher J. Dodd, D-Conn., who led the effort to enact reforms in the U.S. Senate, was already looking ahead to more.

In a conference call with reporters Friday, Dodd said there are still two major issues that remain unfinished business: a cap on interest rates and limits on fees that merchants pay when a customer uses a credit card for a purchase.

Both issues were part of the debate that led to the wide-ranging reforms signed into law by President Barack Obama Friday, but never made it into the final Senate bill.



Dodd said it was outrageous that a credit company could charge more than 30 percent interest on purchases. It was equally appalling, he said, that big credit card companies make so much money from small store owners and other entrepreneurs who have to fork over a portion of their profits when customers pay with credit cards.

"And we've got to do something about it," Dodd said.

The Senate rejected a proposal to cap interest rates at 15 percent amid intense lobbying by the banking industry and worries by some lawmakers that the cap would kill the broader credit card overhaul package.

Dodd has asked that the Federal Reserve conduct an analysis to determine how Congress could rein in interest rates.

A similar study on merchant "interchange fees" will be conducted by the Government Accountability Office. The fees, typically 2 to 3 percent of each transaction, are paid by the merchant so they can accept major credit cards and have those transactions processed through banks.